With all of the recent changes to the rules surrounding inherited retirement accounts, it can be tough to figure out what, exactly, you are required to do to stay on the right side of the IRS.

However, By understanding the rules around inherited retirement assets, you will be better equipped to avoid costly mistakes, like early withdrawal penalties.

In this episode of Malcolm on Money Office Hours, Malcolm shares a few things to be aware of if you have just inherited a retirement account from a loved one, as well as advice on how to keep from giving close to 50% of it over to the IRS unnecessarily.

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For real estate investors with portfolios spanning several decades, the decision to sell a property can present a significant financial dilemma. On one hand, the allure of capitalizing on a property's appreciated value is tempting. On the other hand, the tax implications of a sale can eat away at any projected financial gain.

Alternatively, a tax-deferred exchange (commonly referred to as a 1031 exchange) can offer a strategic advantage for mitigating the potential tax burden of unloading an investment property that has appreciated in value. A 1031 exchange can also be used to facilitate a stable source of income in retirement, as well as allow an investor to simplify their estate plans.

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If you recently changed jobs or are currently considering an offer for a new one, you have probably thought about your new salary and benefits package, the commute, and perhaps even how you will reward yourself for a job well done. However, there is a good chance you may not have given much thought to what you will do with the money accumulated in your former company’s 401(k) plan.

If you’re changing jobs or retiring, it’s important to know the rules regarding moving funds from your employer sponsored retirement plan. Because once you’ve submitted the rollover paperwork, the toothpaste is out of the tube, and there’s no going back.

In this episode of Malcolm on Money Office Hours, Malcolm shares key details on how to avoid making a mistake when you roll your old 401k into an IRA (or individual retirement account).

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In discussions about building a financial legacy, the words “generational wealth” have become almost meaningless. This term has morphed into a buzzword that is casually tossed around in conversations ranging from estate planning, meme stock investments and cryptocurrencies, to the purchase of real estate or insurance.

But beyond the allure of long-lasting riches, what does creating generational wealth truly entail? At its core, generational wealth refers to assets being passed down from one generation to the next, ensuring financial security and providing opportunities within families. However, generational wealth is not entirely about money or financial assets; it also includes intangible assets such as education and professional networks.

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These days, companies must get creative about the ways in which they both compensate and motivate their workforce. And one of the most popular practices is to offer employees opportunities to purchase shares of the company's stock through their 401(k) plan.

In some instances, employees are able to accumulate a sizeable number of those shares and defer taxes on any growth in the process. But what happens to those shares when it's time to part ways with that employer?

In this episode of Malcolm on Money Office Hours, Malcolm shares details on a lesser known strategy that anyone who has accumulated shares of company stock inside their 401(k) account should know about. He also lays out how to execute such a transaction, as well as some issues to be aware of prior to submitting rollover paperwork.

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In a stock market fueled by excitement over artificial intelligence (AI) and its potential, much attention is paid to the advanced microchips used to power these ever-evolving technologies. However, the unsung heroes of AI’s rapid evolution are the data centers that form the backbone of this industry.

As big tech companies such as Microsoft, Amazon, Alphabet, META, and others race to dominate the AI landscape, the importance of data centers has become increasingly evident, arguably surpassing microchips in certain aspects.

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Receiving an unexpected financial windfall can be a life-altering event. Whether an inheritance, lottery winnings, legal settlement, sale of a business, or a substantial bonus from your employer, such a spike in your cash flow can be just as overwhelming as it is exciting. Though it may not seem like much of a problem to come into a lot of money all at once, it certainly requires a plan to make sure that it not only lasts but also helps to enhance your overall quality of life.

Sudden wealth has the power to transform the lives of those who receive it, with outcomes ranging from positive to negative or somewhere in between. This potential transformation is due to the number of decisions that come along with receiving a large sum of money. Each decision carries the possibility to either squander the funds or use them productively, enhance overall happiness or diminish it, and strengthen personal relationships or undermine them.

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When it comes to retirement, savvy savers know that diversification is key, not in the assets they choose but also regarding the types of accounts they use. By strategically allocating retirement savings across traditional IRAs, Roth IRAs, and taxable brokerage accounts, pre-retirees can optimize their tax situation prior to and during retirement.

Tax diversity simply refers to the practice of spreading investments across different account types that each have distinct tax implications for contributions, growth, and withdrawals. And the significance of such a strategy in one's investment portfolio cannot be overstated.

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As the stock market continues to reach record highs, with valuations reaching what some investors fear might be unsustainable levels, concerns about an impending correction have intensified. This nervous market sentiment has led prudent investors to consider rotating a portion of their portfolios toward safer investments that have a tendency to hold up when markets falter.

Historically, when investors seek out safe havens during periods of increased market volatility, they tend to land in one of two places: Treasuries if they’re looking for fixed income solutions, and utilities or consumer staples if they want to stick it out in stocks. But following the Covid-19 bear market that began in early 2020, there has been a shift in market dynamics, where “big tech” has become the new go-to for stability.

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In the modern economy, side hustles, consulting, and freelance work have become increasingly popular ways to supplement income. And in some cases, side projects can even produce more income than traditional full-time employment, though managing the tax implications of these additional earnings can be challenging.

Income from side projects is subject to taxes, just like your paycheck from your full-time job. However, unlike traditional employment, taxes are not automatically withheld from your earnings. Instead, you are responsible for reporting this income and paying the appropriate taxes, including self-employment tax, Social Security, and Medicare.

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Each year, tax season brings with it a flurry of decisions and calculations, particularly regarding how to reduce one's overall taxable income. Among these decisions is whether to itemize or take the standard deduction. This can be a critical choice for many taxpayers, but especially high-income earners as they tend to have more complex financial situations that create a larger tax liability.

Whether high-income earners should take the standard deduction depends on their specific financial circumstances, including the amount and type of deductions available to them. And while this group of taxpayers is generally more likely to benefit from itemizing deductions, this is not always the case.

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When you think of an estate plan, you likely envision a list of assets to be distributed among your heirs upon your passing. But this outdated viewpoint may be why so few Americans have a formal estate plan. Presumably, drafting an estate plan is viewed as a concern only the wealthy consider.

However, the significance of having a well-structured estate plan cannot be overstated, regardless of income or net worth. An estate plan goes beyond the sheer allocation of assets. It is a comprehensive blueprint that not only safeguards your financial assets from potential legal entanglements and unnecessary taxation, but it can also provide your family with instructions for ensuring the well-being of any minor children in your absence.

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For many, Tax Day can be one of great distress and anxiety. Whether it is remembering an entire years’ worth of financial transactions, tracking down receipts, or simply the fear of having to write a big check to the IRS, many taxpayers experience a sense of dread as the April 15 deadline approaches.

The apprehension commonly associated with tax season, however, can be significantly reduced with effective tax planning throughout the year. By adopting a proactive approach, which includes regular reviews and adjustments, the Tax Day deadline becomes less stressful and more routine.

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For many high-earners workers in stressful, demanding positions, owning a real estate portfolio that supplements income and allows you to retire early seems ideal. Whether through house hacking, multifamily buildings, short-term vacation, or single-family rentals, the allure of generating passive income through real estate can sometimes be a mirage.

Owning real estate has long been the cornerstone of wealth creation in the United States. However, it does not happen overnight, and what online influencers and message boards often neglect to mention is the actual amount of time and energy required to manage a property. From screening tenants to collecting rent, performing maintenance, and managing online listings, the demands of owning real estate are a significant undertaking.

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As retirement approaches, the checklist of financial preparations often includes bolstering savings accounts, fine-tuning investment strategies, and choosing the right healthcare plan. However, one financial strategy that can significantly influence your lifestyle in retirement is paying off your home mortgage.

It is presumably common knowledge that maximizing one’s retirement contributions while in their 50s and 60s is the most sensible thing a pre-retiree can do to prepare for their third act. However, less is said about the impact of being debt free prior to retirement.

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When it comes to estate planning, many people make the assumption that their last will and testament has the final word over how their assets will be distributed once they pass. And although it is a reasonable assumption, it is important to recognize that a will, while an integral component of an estate plan, may not be enough to ensure the seamless transfer of assets to your intended beneficiaries.

One often overlooked yet pivotal aspect of estate planning is the significance of keeping beneficiary designations current. Failing to regularly review and update these designations can lead to unintended consequences, potentially cancelling out the entire plan.

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If you work for a living, your most valuable asset is not your house, vehicle, or even what’s in your bank account; it is your ability to continue generating income. And for high-income earners who are typically knowledge workers, this asset is even more vital.

Your specialized skills, expertise, and experience are not easily replaceable, and a temporary or permanent work stoppage can not only disrupt your income but can also affect your long-term financial security. As a high earner, your income influences your lifestyle. Disability insurance ensures that you can cover most of or all your monthly expenses without draining your savings or incurring debt.

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Quite often, when it comes to saving for retirement, most people think about owning traditional investment options such as stocks, bonds, mutual funds, and ETFs. And while those traditional investment vehicles certainly have their merits, other investors are increasingly turning to alternative options that provide greater control, potential for higher returns, and increased diversification, such as private real estate and privately held businesses.

Though it is certainly possible to own such an investment outright by writing a check and using “cash,” a potentially more favorable avenue gaining prominence is the self-directed Individual Retirement Account (IRA). A self-directed IRA is a type of IRA that can hold various alternative investments typically prohibited from regular IRAs.

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Despite the myriad of articles, white papers, and academic research pointing to the issue of Americans saving too little for retirement, it is quite common for some retirees to accumulate significantly more savings than they will ever need in their lifetime. This phenomenon can be attributed to several factors, one of the most significant reasons being that retirees often spend less as they age. If addressed in advance, this can present an incredible opportunity to create a lasting financial legacy for their heirs.

For older retirees who have managed to save more than they will likely spend, strategic Roth conversions can be an effective strategy to maximize the wealth passed on to the next generation. By taking advantage of the unique tax benefits offered by Roth IRAs, you can ensure that your hard-earned dollars continue to benefit your loved ones for years to come.

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